What are the Pension Schemes Available in India

An individual’s ability to save for retirement is critical, even if they have a substantial amount of money saved. Pension plans such as NPS, also known as retirement plans, are a form of investment plan that allows you to accumulate a portion of your assets over an extended period to have a more secure financial future in the future. A pension plan like NPS can assist you in coping with the uncertainty of post-retirement life and ensure a consistent stream of income after retirement.

Long-term financial planning for retirement, such as a NPS scheme, can help you assure a financially secure future for yourself and your family when you leave the workforce. Pension plans not only help to protect an individual’s financial security after retirement, but they also assist an individual in dealing with the unexpected events that may occur after retirement. To be eligible for a retirement plan, the insured must make regular contributions of a set amount until retirement. The accumulated money is returned to the insured in the form of a pension or an annuity at regular intervals in the future.

Listed below are various pension schemes available in India:

National Pension Scheme (NPS)

Government of India introduced a National Pension Scheme to ensure that individuals have a secure financial future when they have retired. Policyholders can contribute to the NPS Scheme with their savings. The money invested is divided between equity and debt funds, depending on the individual’s preference, to earn returns on investment. After reaching retirement age, the policyholder can withdraw 60% of his or her money, with the remaining 40% going toward the cost of the annuity. 

Public Provident Fund (PPF)

Public Provident Fund is a long-term investment scheme with 15-year duration. As a result, compounding has a significant impact, particularly towards the conclusion of the term. In your PPF account, you can make annual investments up to a maximum of 1.5 lakhs. You have the option of paying in whole upfront or in twelve installments spread out over the financial year. Under Section 80C of the Income Tax Act, your PPF investments are eligible for tax deductions. Every financial quarter, the government sets the interest rate on the PPF based on the earnings made from government securities. The funds are not tied to the stock market.

Employee Provident Fund (EPF)

Employee Provident Fund is a government-sponsored savings scheme for salaried employees. Contributions to your EPF account must be equal to an amount from both your employer and yourself. Every month, a portion of your compensation is deducted from your pay. In this case, the EPFO determines the rate of interest on the investment. When you retire, you will get the whole amount of funds that you and your employer have contributed, as well as any interest that has accrued.

Fixed Deposit Scheme (FD)

Fixed deposits are basically a way to lock in an amount of money for a certain period of time. On a cumulative basis, interest can be earned on the principal during the repayment term. At certain intervals, the accumulated interest is added to the principal. Various Banks offers fixed deposit scheme in India. It is also possible to calculate the FD maturity amount by an online FD return calculator tool.

This FD return calculator is the most accurate approach to compute the amount of money invested in FD schemes offered by banks or financial institutions at the time of investment. You can also open Fixed Deposit account by online or offline mode in easy and hassle free manner. Various Banks offers automatic roll-out facilities, so you can have the interest earned on your Fixed Deposit crediting to a designated account or being paid out to another.